Landlord and Tenant Issues

What is an above-guideline rent increase, and how can tenants respond?

Last updated October 7, 2026.

An above-guideline increase (AGI) is a rent increase higher than the yearly provincial guideline that the Landlord and Tenant Board approves on a landlord's L5 application. Landlords can apply only for extraordinary municipal tax increases, eligible capital expenditures, or outside security services (Residential Tenancies Act, 2006, s. 126). Tenants can attend the hearing, challenge each claim, and raise serious maintenance problems that can stop the increase for their unit.

AGIs usually affect a whole building, so the hearing can involve dozens of tenants and a large file of invoices. This guide explains the process, the limits and the tenant's options as of October 2026. For general help with rent and tenancy disputes, see our page on landlord and tenant matters at the Board.

What is the guideline, and who does an AGI affect?

The Ontario rent increase guideline is 2.1% for 2026 and 1.9% for 2027. It is the most a landlord can raise most tenants' rent in a year without the Board's approval, and it is capped at 2.5%. The rent can usually go up only once every 12 months, with at least 90 days' written notice on the proper LTB form.

The guideline, and therefore the AGI process, does not apply to every unit. Ontario's guideline page lists exemptions, including new buildings, additions and most new basement apartments first occupied for residential purposes after November 15, 2018, and community housing units. If your unit is exempt from the guideline, the landlord does not need an AGI to raise the rent by more, although the 12-month and 90-day notice rules still apply (s. 6.1 exempts the guideline sections, not the notice sections).

How does an AGI application work, step by step?

The landlord files an L5. The application must be filed at least 90 days before the first rent increase it claims (s. 126(3)), called the first effective date. The fee is $233 for the first ten units plus $10 for each additional unit, to a maximum of $1,000.
The landlord gives tenants a notice of rent increase. It can show the higher amount being sought. Until the Board decides, you only have to pay the lesser of that amount and what the landlord could charge without an AGI (s. 126(5)). You can choose to pay the full amount, and the landlord owes back any excess the order does not allow (s. 126(6)).
Tenants get the paperwork. If capital expenditures are claimed, the landlord must make the supporting material available. Interpretation Guideline 14 says that on request this is a compact disc of PDF files for no more than $5, or by agreement a paper copy at cost or an email at no charge.
The Board sets the hearing type. Applications based only on taxes or security costs are usually decided in writing; capital expenditure applications usually go to an oral hearing, with a case management hearing first. In a written hearing, tenants may file a response within 50 days of the Notice of Written Hearing, and the landlord may reply within 65 days (Rules 11.1 to 11.3).
The case management hearing. A dispute resolution officer runs it, and the parties can try to settle some or all issues. A tenant who does not attend may be deemed to accept the facts in the application (Rule 9.5). See our guide on mediation at the Landlord and Tenant Board before agreeing to anything.
The hearing. Tenants can question the landlord about every claim and bring evidence. Requests to reschedule or adjourn an AGI hearing are considered only in exceptional circumstances (Rules 21.6 and 21.9).
The order and service. Since July 1, 2026, a landlord directed to serve an AGI order must do so within 7 days of its issuance and file a certificate of service within 5 days of serving it, according to the LTB.

The three AGI grounds and their limits (RTA s. 126 and LTB Interpretation Guideline 14)
Ground	What qualifies	Yearly limit above the guideline
Extraordinary increase in municipal taxes and charges	A tax increase greater than the guideline plus 50% of the guideline, comparing two 12-month periods	No 3% cap; the full justified increase can be taken in the first year
Eligible capital expenditures	Major repairs, replacements or additions expected to last at least five years, paid for and finished within the 18 months ending 90 days before the first effective date	3% per year, for up to three years in total
Security services	New or higher costs of security provided by people who are not the landlord's employees	Shares the same 3% cap with capital expenditures

What counts as an eligible capital expenditure?

Section 126(7) lists six purposes: protecting or restoring the building's physical integrity, meeting the landlord's repair duty, maintaining plumbing, heating, mechanical, electrical, ventilation or air conditioning systems, providing access for persons with disabilities, promoting energy or water conservation, and maintaining or improving security. Guideline 14 adds that routine maintenance, such as cleaning, elevator servicing and appliance repairs, is not a capital expenditure, and neither is work that is mainly cosmetic or designed to add prestige or luxury.

Two exclusions matter to tenants. Replacing something that did not need major repair or replacement is not eligible unless the replacement improves accessibility, energy or water conservation, or security (s. 126(8)). And a capital expenditure cannot be passed on to a tenant whose tenancy began after the work was completed (s. 126(9)).

When the expenditure's useful life has run out, a tenant who still lives in the unit gets a rent decrease equal to the percentage the order attributed to the capital work, on the date set in the order (s. 129).

What changes the answer?

Serious maintenance problems in your unit. If the landlord has not completed work orders or Board-ordered repairs tied to a serious breach, or is in serious breach of its repair duty, and your unit is affected, the Board must either dismiss the application for your unit or delay the increase until the work is done (s. 126(12) and (13)). Only current, unresolved breaches count. Outstanding elevator orders have the same effect (s. 126(12.1)). For a stand-alone repair claim, see how a T6 maintenance application works.
Your personal finances. Guideline 14 says the Board has no power to consider a tenant's personal financial circumstances when deciding an AGI.
When you moved in. If your tenancy started after the capital work was finished, that work cannot be charged to you (s. 126(9)). And the order stops applying to a unit once a new tenancy for it takes effect on or after the day 90 days before the first effective date (s. 126(14)).
Whether the cost was reasonable and properly allocated. The Board reduces claims for government grants, insurance or salvage proceeds, limits related-party costs to market value, and allocates costs away from commercial space and units not in the application (O. Reg. 516/06, as summarized in Guideline 14).
Whether the matter settles. A mediated settlement cannot raise rent by more than the guideline plus 3% of the previous year's lawful rent (s. 194(3)). A consent order reached at the case management hearing binds all parties, even those who did not attend.
Whether the landlord takes the increase on time. An increase not taken in the 12-month period set by the order is lost, according to Guideline 14.

For example, how might tenants respond to a building-wide AGI?

For example, imagine a 60-unit Hamilton building where tenants each receive a notice of rent increase showing 2.1% plus 4.5%, and an L5 claiming a new roof, new windows, lobby renovations and a parking garage repair. A tenant named Priya, who pays $1,500 a month, asks the landlord for the supporting documents and receives a CD for $5.

Priya and several neighbours meet and sort the claims. They question whether the lobby renovation was mainly cosmetic, ask whether the old windows really needed replacing, and point out that two units moved in after the roof was finished. Priya also has a City work order about water coming through her bedroom ceiling that the landlord has not completed after the deadline. While the case continues she pays her old rent plus 2.1%, which is the most the landlord could charge without an order.

Even if the Board found that 4.5% was justified by capital work, the cap in section 126(11) would allow 3% in the first year and the remaining 1.5% in a later year. If the Board found that Priya's unresolved leak was a serious breach affecting her unit, it would have to dismiss the application for her unit or hold back her increase until the repair was done (s. 126(13)). The result for each claim depends on the evidence. This example is hypothetical.

What mistakes do tenants make with AGIs?

Skipping the case management hearing. A tenant who does not attend may be treated as accepting the landlord's facts and may not get further notice.
Arguing hardship instead of the claims. The Board cannot weigh personal finances. Focus on eligibility, cost, timing and allocation of each item.
Not asking for the documents early. The supporting material is where weak claims show up, and the hearing is rarely adjourned.
Raising old repair problems. Only current, unresolved serious breaches stop an AGI. Bring work orders, photos and correspondence that show the problem exists now.
Paying the full new amount without tracking it. If you choose to pay it, keep records, because the landlord must repay anything above what the order allows.
Agreeing to a settlement without reading the limits. Know the guideline plus 3% ceiling on mediated rent increases before you sign.

What to do this week

Find the Notice of Hearing or Notice of Written Hearing and diary every date, including the 50-day response deadline if it is a written hearing.
Ask the landlord in writing for the supporting materials filed with the L5.
Check your move-in date against the dates the claimed work was completed.
List any unresolved repair problems in your unit and gather work orders, photos and letters.
Talk to neighbours; tenants with the same issues can organize their evidence together.
Keep paying at least the lawful rent you could be charged without an AGI.
Get advice before the case management hearing if you are considering a settlement.

Frequently asked questions

Do I have to pay the higher rent while the application is pending?

No. Until an order takes effect, the landlord cannot require more than the lesser of the amount in the notice and the amount allowed without an AGI (s. 126(5)). If the Board later approves the increase and you owe a balance, it can let you pay over up to 12 months when the order comes three months or more after the first effective date, according to Guideline 14.

Does my last month's rent deposit go up too?

Possibly. When the lawful rent increases, the landlord may require a top-up so the deposit equals one month's rent (s. 106(3)). Our guide to the last month's rent deposit explains the interest the landlord owes on it.

Can the landlord charge me for copies of the AGI documents?

Only within the limits in Guideline 14: no more than $5 for a compact disc, or reasonable photocopying costs, or a free email if you agree. For other charges a landlord can and cannot collect, see our guide to deposits and fees Ontario landlords can charge.

Can I sign a separate agreement with my landlord for a bigger increase?

Section 121 allows a landlord and tenant to agree in writing, on the Board's form, to an increase above the guideline in exchange for specified capital work or a new or added service. The increase cannot exceed the guideline plus 3% of the previous lawful rent, and you can cancel by written notice within five days of signing. If the landlord does not keep its side of the agreement, a tenant can apply on Form T4.

What if I think the AGI order is wrong?

A request to review an order issued on or after July 1, 2026 must be filed within 15 days (s. 209(3)), and only on the grounds set out in O. Reg. 178/26. Our guide on challenging a Landlord and Tenant Board order covers reviews and appeals.

Is the hearing held in Hamilton?

The LTB may hold any hearing by video, in writing or in person (Rule 7.1). For local details on City work orders and tenant supports, see our page on the Landlord and Tenant Board for Hamilton rentals. Carson Frankum, a licensed paralegal in Hamilton, can represent tenants in an AGI hearing.

For the basics of ordinary yearly increases, see the existing guide for tenants disputing rent increases.

Sources

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This page gives general information about Ontario law, not legal advice for your situation. Cheddar Paralegal PC is a paralegal firm licensed by the Law Society of Ontario; licensed paralegals can help only with matters the Law Society allows paralegals to handle.